Gerard DiPippo and Jude Blanchette, experts at the Center for Strategic and International Studies (CSIS), recently examined the effectiveness of using sanctions to deter a Chinese invasion of Taiwan by the People's Liberation Army (PLA).
DiPippo, CSIS Economics Program Senior Fellow, and Blanchette, CSIS Freeman Chair in China Studies, discussed the topic in their commentary, Sunk Costs: The Difficulty of Using Sanctions to Deter China in a Taiwan Crisis. In the paper, they outlined why concerns over the possibility of an invasion of Taiwan by China are growing, and how policymakers in the United States are grappling with ways to deter such military action.
The authors referenced legislation introduced earlier this year by U.S. lawmakers that would demand broad sanctions against China if it invades Taiwan. The commentary quotes Rep. Mike Gallagher (R-Wisc.), a cosponsor of the legislation, as saying the bill “makes clear that should [Chinese leader Xi Jinping] choose to invade, the U.S. will not hesitate to respond with crippling and comprehensive economic sanctions on any person or company supporting a [Chinese Communist Party (CCP)] invasion of Taiwan.”
Gerard DiPippo
| CSIS
DiPippo and Blanchette argue that for sanctions to be a direct and impactful deterrent, they must be implemented early enough to alter China's cost calculation and dissuade future actions in the Taiwan Strait. While the authors emphasize the importance of early sanctions to make a difference, they also predict China would blame the "tank the global economy" on sanctions, not on an invasion of Taiwan.
The authors acknowledge that sanctions should not be dismissed as ineffective. Western leaders often hesitate to impose crippling sanctions until it is too late to deter Beijing effectively, they argue.
The authors propose targeting major Chinese banks or freezing overseas reserves of the People's Bank of China as potential measures to disrupt China's economic and military planning. Additionally, they suggest that sanctions should be accompanied by a clear signal of Western commitment to using military force if necessary.
DiPippo and Blanchette emphasize that while sanctions alone are unlikely to impact Beijing's plans, they can still serve a deterrence purpose by emphasizing the enormous costs and potential massive sanctions associated with a conflict in the Taiwan Strait.
"Sanctions matter for establishing a baseline level of deterrence for Chinese leaders but are likely to matter less as a marginal deterrent once a Taiwan crisis begins," DiPippo and Blanchette said.
China incorporates potential sanctions into its decision-making process, the authors state, making it difficult to calibrate sanctions for actions short of a full-scale invasion.
In the analysis, DiPippo and Blanchette argue that although sanctions can establish a baseline level of deterrence, they are unlikely to be effective once a Taiwan crisis is underway.
"If Xi Jinping doubts the United States’ political will to militarily intervene in a Taiwan crisis, or if he believes that the PLA will win a quick and decisive victory, the threat of sanctions would be toothless," the authors state in the commentary.
DiPippo and Blanchette use the example of Russia's invasion of Ukraine in 2022 to illustrate the limitations of sanctions as a deterrent. Despite being aware of the economic sanctions that would follow, Russian President Vladimir Putin proceeded with the attack.
"It is more than likely that [Putin] assumed some degree of economic and diplomatic backlash following an attack but nonetheless concluded that if the Russian military could neutralize the leadership in Kyiv and achieve early battlefield success, the result would be largely in line with the response to his 2014 invasion of Crimea," DiPippo and Blanchette state.
China may perceive a failure to secure a clear victory as a threat to its leadership and the Chinese Communist Party's grip on power, the authors state. This perception makes de-escalation a risky proposition, rendering the marginal deterrent impact of sanctions less significant once a conflict is underway.
The authors argue that sanctions should be considered as part of a broader diplomatic approach aimed at shaping China's planning and calculations. To achieve the desired effect, sanctions must be perfectly orchestrated and coordinated with other Western nations.
"Finally, in gaming out the use of economic coercion, it becomes clear that sanctions themselves will do little to impact Beijing’s calculations unless paired with a credible military threat," DiPippo and Blanchette argue.
"Severing ties with China would be far more costly and complicated," they said.
